from the another-week,-another-disruption-stifled dept

Last week, lots of attention was paid to New Jersey's idiotic and corrupt decision to block Tesla from operating its own stores there, because car dealers don't like the competition and hate the idea of car manufacturers selling direct. As we noted, any such move is a pretty clear sign of corruption at the state level, favoring political allies over the public. There are similar issues at the city level, and this week's corruption highlight award goes to Seattle, where the city council has massively limited ridesharing/app-based transportation services like Uber, Lyft and Sidecar. The law doesn't ban them outright, but makes them a lot less useful for consumers (and drivers) by saying each can only have 150 cars on the road at any time -- which is a hell of a lot less than the combined 3,000 they had.

There's simply no reason for this, other than to protect the legacy taxi providers. If consumers want those app-based services, why are they being blocked? And, of course, because so few cars will be available, those services become a lot less desirable (less likely to have a car available nearby, etc.). The end result is that it sucks for everyone. People wanting to get places will have fewer options. People who might want to earn money as a driver cannot. These new innovative companies are held back. The only "winners" are the current taxi owners who have less competition.

One council member, Tom Rasmussen pointed out the absurdity of this, and offered up an amendment (which was voted down) that said there shouldn't be any caps on drivers from such services:

"Let's listen to what the public is saying," he said. "Let's not cut supply when demand is so high."

The public? The public? Ha! They're not lobbying like the taxi and limo companies.

As another council member, Tim Burgess notes:

"Someone told me that trying to limit TNCs would be like prohibiting Netflix because we wanted to protect Blockbuster," Burgess noted.

Indeed. And yet... it's now the law in Seattle. In a city known for having a fairly thriving innovation and tech scene, the city council has just made it clear that innovation that upsets local incumbents just isn't welcome.

from the can't-beat-'em-in-the-market,-so... dept

There's nothing like a bit of disruptive innovation to make the legacy players start busting out the old moral panics. We've written a few times about the new generation of ride-for-hire and ride-share services, which are really disrupting the old taxi and limo business -- leading to all sorts of highly questionable lawsuits and attempts at regulating these new players into oblivion. In almost every case, it seems quite clear that these attacks are not because the service is bad for consumers... but because it's disrupting traditional players who haven't innovated. So, it came as little surprise this week to receive an email from the "Taxi, Limousine & Paratransit Association" excitedly telling me all about a new paper they've issued with a giant "warning" about what they call "rogue apps." Isn't that great? Rather than innovative and disruptive services that consumers absolutely love, they just rebrand them as "rogue" apps and they can make them seem sssssssssssssscary. The paper grades various new services, giving them a "red light," "yellow light" or "green light."

Not surprisingly, the more well known apps -- Uber, SideCar, Lyft and Tickengo -- all have received the coveted "red light." While according to the TLPA this means they're dangerous "rogue apps," to me it suggests that they're all doing something right. They're providing services that people want that are more convenient or better priced than the old guard, which is why the old guard has to attack them.

The key point they make is that these are all "unregulated" taxi services, which allows them to go into full out moral panic mode about how, without regulations, these services will likely take advantage of consumers. The paper talks about threats of "criminal" drivers and the potential for meter rigging. Of course, as we've seen in other industries, this seems like a clear case of businesses using regulations to keep out innovation and competitors, rather than for a legitimate purpose. Yes, many of those regulations were put in place for a good reason originally, yet many of those reasons really don't apply to these new services.

In the past, you needed regulations to protect you from drivers taking extra long paths to where you wanted to go, driving poorly or charging too much -- because drivers could do that and there was little recourse. But the thing about these new services, which rely heavily on online reputation systems, is that these reputation systems make the need for such regulations much less necessary. The services, like Uber, set the price and poor drivers get booted from the system based on user reviews. And, since most people who have a mobile phone these days to use one of these apps will also have GPS on those phones, people can self-monitor if the driver is taking a reasonable route. Basically, the original safety reasons (which, again, may have made sense at the time) for many of those regulations simply may not really apply to these new services. But rather than deal with that, the legacy players are doing what legacy players do: using those regulations to try to stomp out innovation and stifle competition.

from the regulation-2.0 dept

Here we go again. Yet another local transportation regulator who either doesn't understand Uber or (perhaps more likely) understands it all too well has decided to give Uber all the free Streisand Effect publicity it needs to build its reputation in the market by trying to pass legislation to shut it down. This time it's the Colorado Public Utilities Commission, which is looking to pass some new regulations that effectively make it impossible for Uber to operate its innovative car/taxi service (which is incredibly popular with users) in Denver. Of course, all this has really done is give Uber the perfect opportunity to get tons of attention for its service in Denver as it urges Uber fans to speak out against the regulatory changes.

Uber points out that the proposed changes will basically make its business model illegal in multiple ways -- saying that you can't price based on distance, effectively keeping Uber cars outside of downtown areas that taxis populate, and forbidding Uber's key relationship set up with drivers (independent partners). As Uber points out, these rules don't serve any legitimate regulatory purpose other than to prop up the taxi business model and hurt the disruptive upstart:

These rules are not designed to promote safety, nor improve quality of service. They are intended to stop innovation, protect incumbents, hurt independent drivers, and shut down Uber in Denver.

Of course, we've seen this before. In a bunch of places where Uber operates, the service faces regulatory crackdown by local regulators who seem to do a lot more to protect incumbent taxi services than they do to figure out what benefits the users the most. This gets back to that concept of corruption laundering that I've mentioned a few times. The regulations can be presented as having good intentions: they want to protect riders from getting scammed by unscrupulous drivers, and they want to make sure the market is safe and efficient. But, as with so many regulatory schemes, what can be positioned as having the best of intentions also serves a secondary purpose: to allow incumbents the ability to thrive, while blocking out competition and the impact of disruptive innovation. That seems to be the case here yet again.

from the about-time dept

Despite some earlier legal battles, it appears that the Washington DC council has made it official that Uber should be fully legal to operate in the city, providing easy rides for hire via your mobile phone. Uber, of course, has run into problems with local regulatory boards across the country (though it frequently, and mostly successfully, turns those conflicts into marketing opportunities). Still, it's nice to see DC figure out a way to make it clear that Uber is absolutely legal there. Apparently the company had to agree to one "concession": to make sure that it really is serving all parts of the city, they had to build into the app a notice to report any discrimination. Seems reasonable enough. While I actually think Uber execs kind of enjoy butting heads with local officials, and rallying the legions of Uber fans behind the cause, I think they'd also agree that, in the long run, it's better for everyone to just have the damned service (which is pretty cool, honestly) be considered legal.

from the regulatory-mess dept

I do a fair amount of traveling, and I've found that one of the more interesting things to do on arriving a new city is to chat with a cab driver about whatever is they feel like talking about. Inevitably, I end up hearing about the absolutely ridiculous bureaucratic nightmares involved with being a taxi driver. Now, you can tell that many of the issues started out as legitimate issues, involving safety and route control, but over time, almost everywhere I've gone, they've turned into pure regulatory capture in an attempt to keep competitors out. We've seen in the past how these sorts of rules have gotten in the way of innovative new startups. There was the situation in Ontario where an operation called PickupPal that set up carpool rides was deemed illegal and fined. Then there was the situation in Tampa, where some startups had started offering "pay what you want" taxi rides, subsidized by advertising, and the existing taxi regulatory committee shut it down.

In the latest example, a company named Ubercab, which lets you use your mobile device to hire a car service/limo (not a taxi) on the go, and handle all the payment through the device, has been ordered to cease & desist. The details are not entirely clear in that report, but it appears the complaint is that this service turns car service/limos into "unlicensed" cabs. Most rules forbid car services from "picking up" rides on the fly. Instead you have to book them ahead of time. But Ubercab allows you to book them on the fly. From what I can tell, it's more expensive than a cab, but cheaper than a normal car service (which makes sense). Now, the SF Metro Transit Authority & the Public Utilities Commission of California, who sent the cease & desist will almost certainly claim it's a "safety issue" or some such nonsense. But, the reality is that it's an attempt to limit competition.

Of course, all this has really done is give Ubercab that much more attention, which they're milking (as they should -- hello Streisand Effect). They're refusing to cease and desist and appear to be poised to fight this. One of the company's founders/investors has said that they'll hire any taxi dispatcher who's fired, though I'm not entirely clear how that fits. If their service focuses on car services/limos, what's that got to do with taxi dispatchers? Either way, this does seem like a case where yet another bureaucracy, fueled by regulatory capture by the industry it regulates, is seeking to block out innovative competition.